SMARTFINANCIAL INC.

Previous wording

The following is a summary of the Company’s financial highlights and significant events during the second quarter and first six months of 2025:

Current wording

The following is a summary of the Company’s financial highlights and significant events during the third quarter and first nine months of 2025:

Previous wording

The following is a summary of certain financial information for the three and six month periods ended June 30, 2025 and 2024 and as of June 30, 2025 and December 31, 2024*(dollars in thousands, except per share data)*:

Current wording

The following is a summary of certain financial information for the three and nine month periods ended September 30, 2025 and 2024 and as of September 30, 2025, and December 31, 2024*(dollars in thousands, except per share data)*:

Previous wording

Net income was $11.7 million, or $0.69 per diluted common share, for the second quarter of 2025, compared to $8.0 million, or $0.48 per diluted common share, for the second quarter of 2024. For the three months ended June 30, 2025, when compared to the comparable period in 2024, the increase in net income of $3.7 million was due to an increase in net interest income after provision for loan and lease losses of $6.0 million and other noninterest income of $1.3 million, offset by an increase in noninterest expense of $3.4 million and an increase in income tax expense of $225 thousand. The tax equivalent net interest margin was 3.29% for the second quarter of 2025, compared to 2.97% for the second quarter of 2024. Noninterest income to average assets was 0.67% for the second quarter of 2025, increasing from 0.63% for the second quarter of 2024. Noninterest expense to average assets increased to 2.44% in the second quarter of 2025, from 2.41% in the second quarter of 2024.

Current wording

Net income was $13.7 million, or $0.81 per diluted common share, for the third quarter of 2025, compared to $9.1 million, or $0.54 per diluted common share, for the third quarter of 2024. For the three months ended September 30, 2025, when compared to the comparable period in 2024, the increase in net income of $4.5 million was due to an increase in net interest income after provision for loan and lease losses of $9.7 million, offset by a decrease in noninterest income of $502 thousand, an increase in noninterest expense of $3.0 million and an increase in income tax expense of $1.7 million. The tax equivalent net interest margin was 3.25% for the third quarter of 2025, compared to 3.11% for the third quarter of 2024. Noninterest income to average assets was 0.61% for the third quarter of 2025, decreasing from 0.74% for the third quarter of 2024. Noninterest expense to average assets decreased to 2.38% in the third quarter of 2025, from 2.50% in the third quarter of 2024.

Previous wording

Net income totaled $23.0 million, or $1.36 per diluted common share, for the six months ended 2025, compared to $17.4 million, or $1.03 per diluted common share, for the six months ended 2024. The increase in net income of $5.6 million for this period was primarily from the increases in net interest income after provision for loan and lease losses of $11.1 million and noninterest income of $1.5 million, offset by an increase of $7.1 million in noninterest expense. The tax equivalent net interest margin was 3.25% for the first six months of 2025, compared to 2.91% for the first six months of 2024. Noninterest income to average assets was 0.66% for the first six months of 2025 and 2024. Noninterest expense to average assets increased to 2.46% in the first six months of 2025, from 2.38% in the first six months of 2024.

Current wording

Net income totaled $36.6 million, or $2.17 per diluted common share, for the nine months ended September 30, 2025, compared to $26.5 million, or $1.57 per diluted common share, for the nine months ended September 30, 2024. The increase in net income of $10.1 million for this period was primarily from the increases in net interest income after provision for loan and lease losses of $20.8 million and noninterest income of $1.0 million, offset by an increase of $10.1 million in noninterest expense and $1.6 million in income tax expense. The tax equivalent net interest margin was 3.25% for the first nine months of 2025, compared to 2.97% for the first nine months of 2024. Noninterest income to average

Previous wording

assets, and lower cost of interest-bearing liabilities. Average interest-earning assets increased from $4.49 billion for the second quarter of 2024, to $4.96 billion for the second quarter of 2025, primarily from the increase in our average loan and lease balances, which was offset by decreases in average securities and average cash balances. Over this period, average loan and lease balances increased by $546.2 million and average interest-bearing deposits increased by $432.7 million. Average securities decreased by $15.3 million, average federal funds sold and other interest earning assets decreased by $70.8 million, average borrowings decreased by $4.9 million and noninterest-bearing deposits increased by $9.7 million. The tax equivalent net interest margin increased to 3.29% for the second quarter of 2025, compared to 2.97% for the second quarter of 2024. The yield on earning assets increased from 5.52% for the second quarter of 2024, to 5.65% for the second quarter of 2025, primarily due the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 3.23% for the second quarter of 2024, to 2.95% for the second quarter of 2025, primarily due to the decrease in rates by the Federal Reserve.

Current wording

Net interest income, taxable equivalent, increased to $42.8 million for the third quarter of 2025, up from $35.4 million for the third quarter of 2024. Net interest income increased due to higher loan and lease balances, higher yields on these assets, and lower cost of interest-bearing liabilities. Average interest-earning assets increased from $4.53 billion for the third quarter of 2024, to $5.23 billion for the third quarter of 2025, primarily from the increase in our average loan and lease balances and average cash balances, which was offset by decreases in average securities balances. Over this period, average loan and lease balances increased by $536.6 million and average interest-bearing deposits increased by $658.4 million. Average federal funds sold and other interest earning assets increased by $161.0 million, average securities decreased by $1.8 million, average borrowings decreased by $49.2 million, average subordinated debt increased by $44.3 million and noninterest-bearing deposits increased by $15.1 million. The tax equivalent net interest margin increased to 3.25% for the third quarter of 2025, compared to 3.11% for the third quarter of 2024. The yield on earning assets increased from 5.65% for the third quarter of 2024, to 5.68% for the third quarter of 2025, primarily due the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 3.20% for the third quarter of 2024, to 2.98% for the third quarter of 2025, primarily due to the decrease in rates by the Federal Reserve.

Previous wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $245 thousand and $257 thousand for the three months ended June 30, 2025, and 2024, respectively.

Current wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $244 thousand and $255 thousand for the three months ended September 30, 2025, and 2024, respectively.

Previous wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $105 thousand and $94 thousand for the three months ended June 30, 2025, and 2024, respectively.

Current wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $117 thousand and $93 thousand for the three months ended September 30, 2025, and 2024, respectively.

Previous wording

growth, offset by decreases in our average securities and average cash balances. Over this period, average loan and lease balances increased by $515.0 million and average interest-bearing deposits increased by $391.1 million. Average securities decreased by $40.6 million, average federal funds sold and other interest earning assets decreased by $59.0, average borrowings decreased by $4.0 million and noninterest-bearing deposits increased by $10.5 million. The tax equivalent net interest margin increased to 3.25% for the first six months of 2025, compared to 2.91% for the first six months of 2024. The yield on earning assets increased from 5.44% for the first six months of 2024, to 5.61% for the first six months of 2025, primarily due to the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 3.19% for the first six months of 2024 to 2.93% for the first six months of 2025, primarily due to the decrease in rates by the Federal Reserve.

Current wording

Net interest income, taxable equivalent, increased to $122.1 million for the first nine months of 2025, up from $100.4 million for the first nine months of 2024. Net interest income was positively impacted, compared to the prior year, primarily by the increase in balances of loans and leases and the increase in yield/rate on interest-earning assets and the decrease in the cost of interest-bearing liabilities. Average interest-earning assets increased from $4.51 billion for the first nine months of 2024 to $5.02 billion for the first nine months of 2025, primarily because of the Company’s continued organic loan and lease growth and average cash balances, offset by decreases in our average securities balances. Over this period, average loan and lease balances increased by $522.5 million and average interest-bearing deposits increased by $481.1 million. Comparing the first nine months of 2025 to the first nine months of 2024, average federal funds sold and other interest earning assets increased by $15.0 million, average securities decreased by $27.6 million, average borrowings decreased by $19.2 million, average subordinated debt increased by $13.3 million and noninterest-bearing deposits increased by $12.1 million The tax equivalent net interest margin increased to 3.25% for the first nine months of 2025, compared to 2.97% for the first nine months of 2024. The yield on earning assets increased from 5.51% for the first nine months of 2024, to 5.63% for the first nine months of 2025, primarily due to the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 3.19% for the first nine months of 2024 to 2.95% for the first nine months of 2025, primarily due to the decrease in rates by the Federal Reserve.

Previous wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $491 thousand and $257 thousand for the six months ended June 30, 2025, and 2024, respectively.

Current wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $735 thousand and $512 thousand for the nine months ended September 30, 2025, and 2024, respectively.

Previous wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $199 thousand and $187 thousand for the six months ended June 30, 2025 and 2024, respectively.

Current wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $316 thousand and $280 thousand for the nine months ended September 30, 2025, and 2024, respectively.

Previous wording

Noninterest income increased by $1.3 million during the second quarter of 2025 compared to the same period in 2024. This quarterly change in total noninterest income primarily resulted from the following:

Current wording

Noninterest income decreased by $502 thousand during the third quarter of 2025 compared to the same period in 2024. This quarterly change in total noninterest income primarily resulted from the following:

Previous wording

Noninterest income increased by $1.5 million during the first six months of 2025 compared to the same period in 2024. This change in total noninterest income primarily resulted from the following:

Current wording

Noninterest income increased by $1.0 million during the first nine months of 2025 compared to the same period in 2024. This change in total noninterest income primarily resulted from the following:

Previous wording

Noninterest expense increased by $3.4 million in the second quarter of 2025 as compared to the same period in 2024. The quarterly increase in total noninterest expense primarily resulted from the following:

Current wording

Noninterest expense increased by $3.0 million in the third quarter of 2025 as compared to the same period in 2024. The quarterly increase in total noninterest expense primarily resulted from the following:

Previous wording

Noninterest expense increased by $7.1 million in the first six months of 2025 as compared to the same period in 2024. The change in total noninterest expense primarily resulted from the following:

Current wording

Noninterest expense increased by $10.1 million in the first nine months of 2025 as compared to the same period in 2024. The change in total noninterest expense primarily resulted from the following:

Previous wording

In the second quarter of 2025 income tax expense totaled $2.6 million as compared to $2.3 million in same period of 2024. The effective tax rate was approximately 17.9% in the second quarter of 2025 compared to 22.6% in the second quarter of 2024. The decrease is primarily related to the Bank’s Real Estate Investment Trust.

Current wording

In the third quarter of 2025 income tax expense totaled $3.3 million as compared to $1.6 million in same period of 2024. The effective tax rate was approximately 19.4% in the third quarter of 2025 compared to 15.0% in the third quarter of 2024. The increase is primarily related to the increase in taxable income between these periods and the establishment of the Bank’s Real Estate Investment Trust in the third quarter of 2024.

Previous wording

In the first six months of 2025 income tax expense totaled $4.9 million compared to $5.0 million in the first six months of 2024. The effective tax rate was approximately 17.5% for first six months of 2025 compared to 22.2% for the six months ended 2024. The decrease is primarily related to the Bank’s Real Estate Investment Trust.

Current wording

In the first nine months of 2025 income tax expense totaled $8.1 million compared to $6.6 million in the first nine months of 2024. The effective tax rate was approximately 18.2% for first nine months of 2025 compared to 19.9% for the nine months ended 2024. The decrease is primarily related to a full year’s benefit from the Bank’s Real Estate Investment Trust.

Previous wording

The Company had total net loans and leases outstanding of approximately $4.08 billion at June 30, 2025, compared to $3.87 billion at December 31, 2024. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

Current wording

The Company had total net loans and leases outstanding of approximately $4.18 billion at September 30, 2025, compared to $3.87 billion at December 31, 2024. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

Previous wording

Nonperforming loans and leases, as a percentage of total gross loans and leases, net of deferred fees, was 0.19% as of June 30, 2025, and 0.20% December 31, 2024. Total nonperforming assets, as a percentage of total assets, was 0.19% as of June 30, 2025, and December 31, 2024.

Current wording

Nonperforming loans and leases, as a percentage of total gross loans and leases, net of deferred fees, was 0.24% as of September 30, 2025, and 0.20% December 31, 2024. Total nonperforming assets, as a percentage of total assets, was 0.22% at September 30, 2025, and 0.19% at December 31, 2024.

Previous wording

We maintain the allowance at a level that we deem appropriate to adequately cover change in the loan and lease portfolio. Our provision for credit losses for loans and leases for the six months ended June 30, 2025, was $2.6 million compared to $818 thousand in the same period of 2024, an increase of $1.8 million, driven by increase in loan and lease volume. As of June 30, 2025, and December 31, 2024, our allowance for credit losses was $39.8 million and $37.4 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit loss as a percentage of total loans and leases was 0.96% at June 30, 2025, and December 31, 2024.

Current wording

We maintain the allowance at a level that we deem appropriate to adequately cover change in the loan and lease portfolio. Our provision for credit losses for loans and leases for the nine months ended September 30, 2025, was $2.9 million compared to $3.1 million in the same period of 2024, a decrease of $149 thousand. As of September 30, 2025, and December 31, 2024, our allowance for credit losses was $39.1 million and $37.4 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit loss as a percentage of total loans and leases was 0.93% at September 30, 2025, and 0.96% at December 31, 2024.

Previous wording

The allowance associated with the individually evaluated loans and leases was approximately $3.9 million at June 30, 2025, and December 31, 2024.

Current wording

The allowance associated with the individually evaluated loans and leases was approximately $4.4 million at September 30, 2025, and $3.9 million at December 31, 2024.

Previous wording

Our available-for-sale securities portfolio is carried at fair market value and our held-to-maturity securities portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our securities portfolio increased from $609.0 million at December 31, 2024, to $626.7 million at June 30, 2025, primarily as a result of available-for-sale securities purchases. Our securities to asset ratio has decreased from 11.5% at December 31, 2024, to 11.4% at June 30, 2025.

Current wording

Our available-for-sale securities portfolio is carried at fair market value and our held-to-maturity securities portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our securities portfolio increased from $609.0 million at December 31, 2024, to $634.5 million at September 30, 2025, primarily as a result of available-for-sale securities purchases and positive adjustments in market value of available-for-sale securities. Our securities to asset ratio has decreased from 11.5% at December 31, 2024, to 11.0% at September 30, 2025.

Previous wording

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, Individual Retirement Accounts and certificates of deposit.. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of June 30, 2025, brokered deposits represented approximately 5.52% of total deposits.

Current wording

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, Individual Retirement Accounts and certificates of deposit.. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of September 30, 2025, brokered deposits represented approximately 3.26% of total deposits.

Previous wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and six month periods ending June 30, 2025, and 2024, respectively (dollars in thousands):

Current wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and nine month periods ending September 30, 2025, and 2024, respectively (dollars in thousands):

Previous wording

The Company believes its deposit product offerings are properly structured to attract and retain core deposit relationships. The average cost of interest-bearing deposits for the three months ended June 30, 2025, and 2024, was 2.95% and 3.23%, respectively. The cost decrease was primarily attributable to the rate decreases by the Federal Reserve. The average cost of interest-bearing deposits for the six months ended June 30, 2025, and 2024, was 2.93% and 3.19%, respectively. The cost decrease was primarily attributable to rate decreases by the Federal Reserve.

Current wording

The Company believes its deposit product offerings are properly structured to attract and retain core deposit relationships. The average cost of interest-bearing deposits for the three months ended September 30, 2025, and 2024, was 2.98% and 3.20%, respectively. The cost decrease was primarily attributable to the rate decreases by the Federal Reserve. The average cost of interest-bearing deposits for the nine months ended September 30, 2025, and 2024, was 2.95% and 3.19%, respectively. The cost decrease was primarily attributable to rate decreases by the Federal Reserve.

Previous wording

Total deposits as of June 30, 2025, were $4.87 billion, which was an increase of $185.6 million from December 31, 2024. This overall increase was driven primarily by increases in other time deposits of $95.2 million, money market deposits of $85.1 million and interest-bearing demand deposits of $7.1 million and the issuance of brokered deposits of $56.9 million, offset by a decline in noninterest demand deposits of $58.6 million. As of June 30, 2025, the Company had outstanding time deposits under $250,000 with balances of $636.9 million and time deposits over $250,000 with balances of $359.8 million.

Current wording

Total deposits as of September 30, 2025, were $5.05 billion, which was an increase of $364.4 million from December 31, 2024. This overall increase was driven primarily by increases in money market deposits of $178.8 million, other time deposits of $174.4 million, and interest-bearing demand deposits of $92.7 million, offset by a decline in brokered deposits of $47.4 million and noninterest demand deposits of $34.1 million. As of September 30, 2025, the Company had outstanding time deposits under $250,000 with balances of $536.0 million and time deposits over $250,000 with balances of $435.7 million.

Previous wording

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be down-streamed as Tier 1 capital to the Bank. Borrowings totaled $7.0 million at June 30, 2025, and consisted of short-term borrowings of $4.0 million, and $3.0 million of securities sold under repurchase agreements. Long-term debt totaled $39.7 million at June 30, 2025, and December 31, 2024, respectively, and consisted entirely of subordinated debt. For more information regarding our borrowings, see “Part I - Item 1. Consolidated Financial Statements – Note 6 –Borrowings, Line of Credit and Subordinated Debt” of this report.

Current wording

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be down-streamed as Tier 1 capital to the Bank. Borrowings totaled $1.3 million at September 30, 2025, and consisted entirely of securities sold under repurchase agreements. Long-term debt totaled $138.6 million at September 30, 2025, and $39.7 million at December 31, 2024, respectively, and consisted entirely of subordinated debt. During the third quarter of 2025 the Company issued new subordinated debt of $98.9 million, net of issuance cost, and on October 2, 2025, the Company retired $40 million of existing subordinated debt. For more information regarding our borrowings, see “Part I - Item 1. Consolidated Financial Statements – Note 6 –Borrowings, Line of Credit and Subordinated Debt” of this report.

Previous wording

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At June 30, 2025, we had $957.2 million of pre-approved but unused lines of credit and $19.5 million of standby letters of credit. These commitments generally have fixed expiration dates, and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase federal funds from other financial institutions. For more information regarding our off-balance sheet arrangements, see “Part I - Item 1. Consolidated Financial Statements – Note 8 –Commitments and Contingent Liabilities” of this report.

Current wording

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At September 30, 2025, we had $1.01 billion of pre-approved but unused lines of credit and $14.4 million of standby letters of credit. These commitments generally have fixed expiration dates, and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate federal funds sold or

Previous wording

The Company has $4.8 million in securities that mature throughout the next 12 months. The Company also has unused borrowing capacity in the amount of $1.22 billion available with the Federal Reserve, Federal Home Loan Bank, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.

Current wording

The Company has $565 thousand in securities that mature throughout the next 12 months. The Company also has unused borrowing capacity in the amount of $1.16 billion available with the Federal Reserve, Federal Home Loan Bank, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.